JetBlue has abandoned a $3.8 billion merger with US ultra low-cost rival Sprit Airlines after a judge blocked the deal.
The two carriers initially filed an appeal against the decision, which described the combination of the two carriers as being anti-competitive and would harm passengers flying in the US.
However, JetBlue and Spirit have now “mutually agreed” to terminate the merger attempt amid doubts over their ability to win necessary legal and regulatory approvals in time for a self-imposed July 24 deadline.
The two airlines insisted that they continued to believe in the pro-competitive benefits of the combination, first mooted last summer to create a “national low fare challenger” in the US.
JetBlue chief executive Joanna Geraghty said: “We believed this merger was worth pursuing because it would have unleashed a national low-fare, high-value competitor to the ‘Big Four’ airlines.
“We are proud of the work we did with Spirit to lay out a vision to challenge the status quo, but given the hurdles to closing that remain, we decided together that both airlines’ interests are better served by moving forward independently. We wish the very best going forward to the entire Spirit team.”
JetBlue will pay Spirit $69 million under the termination agreement.
“JetBlue has a strong organic plan and unique competitive advantages, including a beloved brand, a unique value proposition, and high-value geographies,” Geraghty added.
“We have already begun to advance our plan to restore profitability. We look forward to sharing more on our progress in the coming months.”
The carrier is refocusing on its core strengths – “deepening its network relevance in proven geographies and better segmenting its product offerings to enhance its competitive position – while delivering meaningful cost savings”.
JetBlue has identified “multiple near-term revenue initiatives” for 2024, including increased distribution and partnerships, expanded loyalty programme functionality, network and ancillary initiatives, which will deliver more than $300 million in revenue benefits.
The airline also remains on track to deliver $175 million-200 million in savings from cost cuts, $75 million in maintenance savings from its fleet modernisation, as well as “incremental savings” from targeted fixed cost base reductions.
Combined, this positions the carrier “to approach break-even operating margins” in 2024.
“These initiatives are just the starting point as JetBlue rebuilds its long-term organic strategy with a renewed focus on driving sustained profitability for its crew members and investors,” JetBlue said.
More details of its long-term strategy and ongoing revenue and cost initiatives are to be disclosed at an investor day on May 30.